Danielson trumped: Minor wins in Landmark hotel arbitration

Minor and Danielson during happier times at the groundbreaking of the Landmark.FILE PHOTO BY JAY KUHLMANN

Back in February, some may have scoffed when liquidity-challenged business tycoon Halsey Minor vowed that he might eventually own one of his nemeses, a multi-billion-dollar banking company. But that was two legal victories ago, with the latest a private arbitration which awards Minor at least $6.6 million in the tussle over the unfinished Landmark hotel.

Coming just a month after teaching Christie's auction house–- via an $8 million jury award–- that it doesn't pay to play hardball with the man who co-founded CNet, the June 28 arbitration decision appears to vindicate the youthful-looking business tycoon and vanquish the hotel development company operated by Lee Danielson, the man who launched the 1990s renaissance of the Downtown Mall.

Ironically, it had been Danielson who had been pushing the matter toward arbitration as Minor's lawyer tried mightily to keep the matter in the courts. However, at a February 17 hearing, Charlottesville Judge Edward Hogshire forced the two sides to choose an arbitrator to lessen the courthouse burden. And what the arbitrator chose puts a hefty burden on Danielson.

Donald H. Kent of Richmond-based arbitration firm The McCammon Group ruled that Danielson possessed such a passion for building a luxury hotel that he misrepresented the construction costs–- including hiding the fact that the restaurant wasn't included in the budget.

"The cumulative effect of this deliberate and reckless conduct," wrote Kent, "amounts to gross negligence."

Contacted for comment, Minor points to a recent essay he penned about the structure of American law. In his June 15 article for the Huffington Post, Minor urges legal action against employees and managers of companies–- he mentions Exxon and British Petroleum among others–- that harm citizens. "The threat of public prosecution," writes Minor, "can be a powerful check on the corporate culture of pathological recklessness that is rapidly devouring America."

As for Danielson, the man who built the just-closed Charlottesville Ice Park and downtown Regal cinema, says he was shocked by the decision. "I did the best job I could," said a chastened Danielson.

Amid Minor's victory, however, there was a bit of a rebuke to his lawyer, DLA Piper, whose billings through February 11 were said to be $2.8 million. However, the arbitrator declared that "reasonable" fees were lower and capped the legal reimbursement at just $2.24 million. That combines with $4.2 million in damages, and the arbitrator left open the idea that Danielson's company may owe Minor for future losses.

As lawyers say, it may all turn out to be moot, as both Danielson and Minor have made statements suggesting that Danielson's company, Hotel Charlottesville LLC, is heading for insolvency. Minor insists he's not going that way.

The Charlottesville-bred Minor, whose business masterstrokes include making early investments in GoogleVoice and Salesforce.com, has held a fortune once estimated around $355 million. But lately Minor has found himself pegged as California's biggest tax deadbeat and losing a pair of creditor lawsuits.

In one of the creditor cases, a judge ordered Minor to pay the Sotheby's auction house $6.64 million and issued a court order demanding that Minor give up many of his worldly goods. As first reported in the New York Post, Minor must fork over all furniture, tapestries, chandeliers, and as well as furs, gems, and watches valued at $35 or more. The June 2 court order also requires Minor to give up all vehicles, including his Audi A8, as well as all collectibles "except for basic tableware and basic cooking utensils and crockery."

At one point, the court order called for Minor to turn over pets and even food beyond a 60-day supply, but judge Barbara S. Jones scribbled out those demands.

"Eating is not necessary for us, but Fluffy the cat stays," Minor jotted in a jocularly defiant email to a reporter. Minor has traced his liquidity woes to an allegedly unfair account freeze by Merrill Lynch, the Bank of America subsidiary which triumphed over him in one piece of litigation last year.

The arbitration decision leaves unanswered exactly what will become of the empty concrete shell looming over Charlottesville's Downtown Mall. In recent days, the 11-story would-be hotel has been rocked by allegations that it already serves as a hotel. For the homeless.

After the Landmark allegedly defaulted on its construction loan, control of the project began shifting to Specialty Finance Group, a division of Silverton Bank, which collapsed into the arms of the Federal Deposit Insurance Corporation. With numerous pieces of litigation–- including suits from the contractor and bank–- the FDIC has thus far declined to sell or indicate plans for the property.

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Original posting: In the high-stakes, high-profile litigation surrounding the long-stalled Landmark hotel project, financier Halsey Minor has won a major arbitration award against the company run by the former developer, Lee Danielson. C-Ville Weekly has a story of the award against Danielson's company which includes $4.2 million in damages and $2.4 million in legal fees.

18 comments

JK July 2nd, 2010 | 7:17pm

You know, this is twice that Mr. Minor has been victorious in the courts. Perhaps he is actually dealing properly and the negative rumblings in Charlottesville papers unfairly portray him.
Before someone here accuses me of having gone to school with him,or some such nonsense, the only contact I have ever had is I believe that earlier in the year, he was the driver of the rental car behind me on Pantops Mountain in the vicinity of Giant. He was the only person not tailgating my beloved new car that day ! Lets cut the man a break and let him finish his hotel.

Gasbag Self Ordained Expert July 1st, 2010 | 8:47pm

Where's all the Minor haters at now? :)

I told ya all Minor wasn't as dumb as many of you said he was. He's got his ducks all lined up in a pretty row.

C-VILLE Employee July 1st, 2010 | 8:44pm

VICTORY!!!!!

Hugh Depayen July 2nd, 2010 | 7:11am

Nice award. Good luck collecting.

JK July 12th, 2010 | 1:59pm

GSOE,

I agree with you. The venom some people have for wealthy people is frightening. Money is only money. No matter how much you have, your grandchild still gets juvenile diabetes for which there is no cure, your spouse still dies of cancer, you still get Alzheimer's disease. We all still die and meet our maker with about the same supplies we carried when we entered this world.
Some should start seeing people as people, not rich, poor, smart, dumb, etc. We all have far more in common than we have differences.

colfer July 3rd, 2010 | 8:20am

There's an easy way to look at this: both Minor and Specialty Finance Group (Silverton Bank) ran out of money at the same time, and played a game of "you pay first". Or only one ran out of money, tough we have evidence for both.

After that, the picture of how it played out depends on your opinion on their motivations, in the absence of more facts. This arbitration result shows somebody, Minor, SPF or Danielson, was going to have to come up with more cash to finish the project. We also know the hotel market quickly declined.

Was there more going on? Extreme versions of what the players were up to did not get any traction from the arbitration result. Based on these reports, no evidence yet for
1. collusion between Danielson & SPF;
2. SPF using gangster tactics on Minor, as it was accused of in Milwaukee when it ran out of money (that borrower paid the extra amount, hotel remains unfinished);
3. misallocation of money;
4. whether Minor stopped paying first.

The problem now is there is no credit to build a project like this; no one likely to do it without a loan; the state legislature would not let the local gov't pay even if it wanted to; endless lawsuits are in play, as well as the FDIC which can afford endless lawyers; the building is decaying.

What could it become?
1. A self storage facility.
2. A climbing wall / paintball arena.
3. Torn down for a park / urban garden.
4. A stack of batteries for solar / wind power.
5. A rehab joint for corrupt plutocrats.
6. Dorms for PVCC.
7. Mysterious foreign takeover.
8. Computer server farm. Our reorganized phone company, which is a Tier-1 provider, will bring us big pipes. Unless it goes like Verizon's similar rural spinoff, FairPoint Communications: bankrupt. Yes, Verizon spun off its less profitable geographic areas and the new company went bankrupt in one year. Wonder who profited there. Go back to #5.

Gasbag Self Ordained Expert July 2nd, 2010 | 9:25am

St Halsey, this Halsey Minor victory has nothing to do with who will finish the hotel, or when. Sooner or later the city will get involved and finish the hotel on the taxpayer's dime.

dont care who won what that big eye score hotel need to go world class city.

Man in room 310-A July 2nd, 2010 | 3:11am

I'm living up here on the 3rd floor of the Landmark Project and it's kind of nice. The rent is cheap, we have air-conditioning 24/7, and the view is spectacular! I just don't like being pecked in the eyes each morning!

St. Halsey July 2nd, 2010 | 6:45am

GSOE- you also promised that the city would finish the hotel - have you forgotten that as well? You power of prediction has not been impressive.

I Want to Believe July 2nd, 2010 | 10:05am

George I hope The Hook recognizes your efforts in the "Best Of".

Best Neologism: eye score --A play on the term eyesore with emphasis on the intentional injury inflicted by a malicious party.

NancyDrew July 5th, 2010 | 8:59am

I predict it will be torn down.

Man in room 310-A July 6th, 2010 | 8:40pm

Up here on the 3rd floor it was almost 100 degrees today! Jesus Christ!!!

GSOE, I think you should rethink your position as Minor's cheerleader. Minor is far from the most useful tool in the shed. He has lost tons of money if you had read the report. How can you be this guy's cheerleader? From the BOA lost, creditor lawsuits, and other losses, Minor appears that a mommy and daddy left a trust fund for him and he made some investments but the plundering personality prevailed and his true intelligence level is seen. I have made better business decisions in my lifetime than he has and ever will. My business has never been worth $300 pus million but neither have I lost that much and left a city's landmark area looking like Iraq.

Gasbag Self Ordained Expert July 12th, 2010 | 1:08pm

quote: "Minor appears that a mommy and daddy left a trust fund for him and he made some investments but the plundering personality prevailed and his true intelligence level is seen."

Do you even know who you're talking about?

His wealth didn't come from mommy and daddy or a trust fund.

And he still has enough left to buy and sell critics like you many times over.

The insane jealousy displayed in these forums for wealthy people like Halsey Minor and Patricia Kluge are hilarious! They decide to buy or sell something and the sky is suddenly falling in on them if you listen to the rumors around here. :)